Towards a formal grounded theory and the trust paradox

Why was the tacit contract between savings banks and customers eroded? Data from bank managers indicated that the explanation was related to macro level processes; the deregulation of saving banks. Deregulation was the engine of the transformation of the trust relation between bank and customer; it was a transformation of the foundations of trust between customer and bank. The change in the legal framework for economic transactions was also a deregulation of the social contract between bank and customer. Deregulation altered the basic social process (BSP) of trust development and was a transformation of a basic social structural process (BSSP) – the formal regulation of banks. Generation of grounded theory on a micro level revealed macro level processes. To understand the underlying dynamics on the micro level, macro level processes had to be integrated in the analysis as a driving force for transformation of the substantive field.

The grounded theory approach resulted in five discoveries: 1) deregulation of the formal structures that embedded the bank-customer relationship transformed the foundations of trust on several levels 2) trust is not a static quality but a dynamic process of social construction 3) existing sociological analytical tools did not grasp the trust dynamics sufficiently 4) grounded theory works to discover macro processes and 5) general sociology enhances the analytical potential of grounded theory.

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A product of the master thesis (Nordnes 1993) was the joining of the above mentioned elements into an early stage of a composite model of trust; a dynamic analytical framework based on sociological concepts for studying trust as a process of social construction. Quite early in the process of theory generation, it was evident that the substantive categories could be sorted into larger groups and the use of general sociological terms improved the clarity, and work and fit of the theory. This step in the generation process moves the theory from the substantive to the formal level as it makes the theory more abstract and hence generalisable.

On the other hand, it raises the question as to whether this process is not an empirical grounding of a formal theory – a distinction that will be further discussed in the final section about formal grounded theory.

Working as social scientist at an applied research institute, it became clear that the dynamic trust perspective has wide relevance as a conceptual framework to study other social processes and contexts in which the production of trust was an important element. The process perspective on trust, the core category mutual understanding and the discovery of the pre-contractual, relational and structural social bases for trust have explanatory power which provides a better understanding of the conditions for cooperation and trust. This approach is one way to make production of trust visible and highlight hidden processes and dynamics which otherwise would remain undiscovered, for instance the trust paradox and social configurations of trust.

The trust paradox emerges in situations of social change and is a combination of two characteristics of trust: 1) trust as a strategy for coping with risk, uncertainty and the unfamiliar and 2) trust as a leap of faith based on mutual understanding. Social change involves risk and increases the demand for trust. Social change is a transformation of the social bases for trust; it alters the composition of trust bases – the social configuration – and platform for mutual understanding. Change in social configuration may disrupt mutual understanding and cause diminishing trust. This is the trust paradox; in situations where there is an increased need for trust, the social foundations for developing it are diminishing.

Exploration of the social configuration of trust means exploring how the dynamics between the three social bases unfold in situations of social change.

The methodological point related to the trust paradox is that the paradox is made visible through the generation of the composite concept of trust. This particular conceptualisation

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highlights mutual understanding and social bases as core concepts to understand the trust process. The core concepts are inextricably connected elements of the composite concept.

This dynamic framework enables us to ask key research questions that identify relevant processes in the empirical field, and which lead to elaboration of the conceptual framework in a way that makes it applicable more generally – as a formal grounded theory.

Every substantive case of grounded theory may have its particularities, but at the same time there are general social processes in play. Examples of this are the development of trust, awareness contexts or the development of new social identities, such as becoming a professional or becoming a non-addicted. Sociological theory is a relevant tool to analyse social processes and forces, and the intersection between substantive processes and general social forces is one door between grounded theory and sociology.

5.9 Generation of formal grounded theory – a door into sociology While there are many good substantive grounded theories, there are few works about developing formal grounded theory (Glaser 2010:99, Kearney 2010). Formal grounded theory has ‘received scant attention’ and ‘is virtually ignored’ because it ‘does not fit the typical qualitative data analysis’ according to Glaser (2007:2); qualitative data analysis is descriptive and does not aim for generation of theory (Glaser 2001, 2002, 2004, 2007).

Glaser refers to several reasons for ignoring generation of formal grounded theory: researcher specialisation, the gap between substantive and abstract knowledge, lack of academic support, discipline lock-in, the fear of depersonalisation of a substantive theory, and lack of skills in applying formal grounded theory. Moreover, most attempts to develop formal grounded theory fail because of misconceptions of the concept and procedures (Glaser 2007). The post-modern rejection of grand narratives and focus on the partial character of knowledge (Lyotard 1997) leads attention toward substantive theory rather than formal theory (Kearny 2010).

Generating formal grounded theory is an ‘arduous task’ according to Stern (2009:62), and novices are advised against doing formal grounded theory (Glaser 2007:83). All these elements might be good reasons for a deficiency of formal grounded theory, but further discussion of them is not the focus here.

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Here the attention is on the elements inherent in the method, elements that may inhibit development of formal grounded theory. One risk is that generalisation and generation of formal grounded theory can be ignored because of the strong focus on generation of substantive theory and on empirical work and fit of theory. Procedural rigour and warnings against reading relevant literature until work is finalised can also turn attention away from abstraction and generalisation.

On the other hand, analysis of basic social processes has an inherent potential for enhancing development of formal grounded theory. This potential is somewhat underdeveloped and could have been more strongly elaborated in the grounded theory literature; it is scarcely discussed as relevant for generation of formal grounded theory. Basic social processes are general features of social life and as such they constitute a potential for abstraction. In addition, when substantive grounded theory is advanced to formal grounded theory, this enhances the theory’s potential for integration with middle range sociological theory. The theories ‘communicate’ better if they are at the same conceptual level.

Formal grounded theory

Empirical grounding instead of logical deduction is the fundamental distinction between grounded theory and conventional theory. A formal grounded theory is rather abstract; the theory is removed from the raw data upon which it is based and the theory has broad applicability. It is developed for a conceptual area of sociological inquiry and differs from substantive grounded theory in the level of abstraction and generality (Glaser & Strauss 1967:32-33, Glaser 2007:5). There is not a sharp division between the two forms of theory, the point where a substantive theory moves into a formal will be a question of interpretation and cannot be decided once and for all. As there is no dichotomous distinction between the two forms of theory, the difference between them is a question of degrees of generality (Dey 1999:41).

According to Glaser (2007:4) a formal grounded theory is ‘a theory of a SGT’s general implications generated from, as widely as possible, other data and studies in the same substantive area and in other substantive areas’.³⁵ The study of trust discussed in this thesis is an example. The initial theory was developed for a substantive area, the relationship between

35 SGT – substantive grounded theory

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saving banks and their personal customers (not businesses customers). Data indicated that the mutual understanding between bank and customer was a foundation for the leap of faith and trusting. Mutual understanding is based on a combination of three social bases: interaction, tacit social agreements and formal contracts. These social bases could be categorised by general sociological terms, as relational, pre-contractual and structural. Gradually it became clear that the process discovered in the substantive case, was a general process. The applicability of the theory to the analyses of various trust situations resulted in a formal grounded theory about trust as a compound and dynamic social process.³⁶

Formal grounded theory is an extension of a substantive grounded theory and is generated through the same procedures as substantive theory, in particular, constant comparison and theoretical sampling. There is an exception in the relationship to conventional theory.

Grounding of formal grounded theory can be done using literature as sources of data, and Glaser (2007: 91) recommends a literature review for conceptual comparisons and theoretical sampling. It is recommended that a formal grounded theory departs from a substantive theory as categories and concepts develop, so that there is no risk for ‘contamination’ of originality.

In this strategy there is a risk of being descriptive or rewriting of the substantive theory.

Rewriting is a possible, but not recommended strategy for developing formal grounded theory (Glaser & Strauss 1967, Glaser 2007). It involves a linguistic transformation of the theory and writing it in a more general manner. The result is neither an empirical grounded formal theory nor a theory built on logic deduction. Formal grounded theory can be generated directly from data, but this can easily become just an ‘ordering of a mass of data under a logically worked-out set of categories’ (Glaser & Strauss 1967:92). The strength of a grounded theory, whether it is at the substantive or formal level, is that it is generated from data and that there is empirical work and fit. A formal theory generated directly from data may not have this as it is likely that the process of abstraction into constructed concepts has involved forcing of data.

One aim of generating formal grounded theory is to expand the use of the theory. This means applying it to study a particular phenomenon in new contexts and through this expanding existing theoretical and empirical knowledge. An additional aim is to develop an analytic tool

36 The general applicability was discovered through various projects as a social scientist at an applied research institute. The theory was rarely applied at the design of the project, but throughout the work, trust processes emerged as one of the explanatory elements (see note 140, chapter 14.2).

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applicable to consultants and lay people (Glaser 2007). Empirical applicability demands empirical work and fit of the theory. But can the existing formal grounded theories be applied to further studies? Is empirical work and fit the difference between these preconceptions and preconceptions from conventional theory? Does applying formal grounded theory not force data as the conceptualisations are used to compare and not to verify? Can empirical fit and relevance also be applied on theoretical fit and relevance? Are these criteria relevant when expanding grounded theory concepts into general theory? The theoretical integration between the composite concept of trust and sociology is one form of elaboration on these questions.

5.10 Basic social processes and macro analyses in grounded